The ArborGen Opportunity Presentation Materials June 20, 2018 - PowerPoint PPT Presentation

The ArborGen Opportunity Presentation Materials – June 20, 2018

FORWARD-LOOKING STATEMENTS There are statements in this Presentation that are ‘forward looking statements. ’ As these forward-looking statements are predictive in nature, they are subject to a number of risks and uncertainties relating to Rubicon and ArborGen, many of which are beyond our control. As a result of the foregoing, actual results and conditions may differ materially from those expressed or implied by such statements. In particular, ArborGen’s operations and results are significantly influenced by the general level of economic activity in the various sectors of the economies in which it competes, particularly in the United States, Brazil, New Zealand and Australia. Fluctuations in industrial output and the impact that has on global demand for wood fibre and hence harvesting and reforestation levels, government environmental and regional development policies, capital availability, relative exchange rates, interest rates, the profitability of our customers, can each have a substantial and material impact on our operations and financial condition. ArborGen-specific risks and uncertainties also include (in addition to those broad economic factors noted above) the global markets and geographies in which it operates, intellectual property protection, regulatory approvals, public and customer acceptance of genetically engineered products, the rate of customer adoption of advanced seedling products, the success of its research and development activities, weather conditions, cone and seed inventories, biological matters, and the fact that ArborGen’s annual crops and seed orchards are not the subject of insurance cover. As a result of the foregoing, actual results and conclusions may differ materially from those expressed or implied by such statements.

3 What is ArborGen’s mission in life? To revolutionize productivity in global plantation forestry … By applying advanced technology … To critical tree traits ... To create new products that deliver ‘step - changes’ in tree -performance

4 The productivity revolution in agriculture will be repeated in forestry ... the agriculture ‘winner’ was the First -Mover Increasing Global Demand for Global, Widespread Need for Food Sustainably Grown Wood Global Area of Biotech Crops 1996 - 2016 Source : ISAAA, 2016 First Mover First Mover

5 The forestry opportunity is significant if it follows the agriculture model  “Corn parallel” - gives insight into the opportunity for ArborGen’s advanced genetics to lift yield in forestry Forestry Terminology Transgenic (or GE) Biotech Yield (bushels / acre) Single-Cross Varietal ArborGen’s Hybrids Advanced Genetics Product MCP Platform Double-Cross Hybrids (mass control Current pollinated) stage of US forestry Open-Pollinated OP seedlings Varieties (open pollinated)

6 Technology employed determines extent of genetic ‘step - up’ – its about re-shaping / breaking the normal distribution curve  ArborGen is the only global • Bio-informatics integrated • Cryopreservation commercial player • Cell replication operating across • Somatic embryogenesis • Genomic selection the entire technology spectrum  ArborGen’s current focus is on MCP and varietals, which do not require any regulatory approval process to be met • There is only one other commercial US MCP player – ArborGen is the leading player • There are no other US Varietal participants, as the technology is proprietary to ArborGen • Value to the forest owner increases with each step in the MCP = normal distribution of seedling Normal distribution of Variety = identical replication of very best MCP GE = Best Variety / Clone outcomes, but with superior mothers seedling outcomes – natural seedling outcome – no variation and hence no technology with biotech trait added and fathers matched under controlled pollination normal distribution as the mean is the continuum conditions moving the mean of the identical replication of the best MCP seedling distribution to the right

7 the story – as highlights The ArborGen Opportunity - advanced genetics is ‘ the ’ value lever  The table below shows the value levers available to forest owners – advanced genetics is the one that ‘moves the dial’ Forest value sensitivity analysis Potential per acre value increment over base US OP loblolly pine MCP/Varietal 1 Site prep Gain to be Competition control achieved from a 10% reduction in Fertilisation silviculture costs Planting Base OP BLV 2 1.0 1.2 1.4 1.6 1.8 2.0 2.5 3.0 BLV increment (x) 2 1 The precise pine value increment is dependant upon the MCP/Varietal genetics adopted, silviculture regime, and site index, amongst other factors 2 BLV refers to ‘bare land value’, which can be thought of as the NPV of a single rotation

8 the story – as highlights The ArborGen Opportunity – how do advanced genetics add value?  Advantages of AG’s US MCP and Varietal loblolly pine ‘genetic chips’ over industry standard OP 1.Superior log out-turns  More volume  … on less land  Higher saw-log out-turn Note: Saw-logs sell for 2.5-3x pulp logs 2. Improved uniformity 3. Shorter rotation length 4. Survival / disease resistance *Vsual representation of smaller core in radiata pine, leaving greater 4x2 structural component – representation only

9 the story – as highlights Pre-requisite #1 – the germplasm advantage Germplasm is critical – technology alone is an insufficient pre-condition for success Germplasm repository (i.e. base genetics and superior crosses) from hundreds of years in aggregate of tree improvement by leading international forestry players Federal Paper Board Co.

10 the story – as highlights Pre-requisite #2 – the ‘tree machine’ has been built There are no global integrated commercial competitors to ArborGen in this arena   ~US$300 million invested over 15+ years to complete the model  No- one else has been able to build / put in place ArborGen’s ‘end -to- end’ integrated Tree Machine platform  Intellectual property portfolio is secure, with ‘freedom to operate’

11 Prerequisite #3 – global commercialisation channels have been built ArborGen operates ~14 nurseries, 15 seed orchards, 30 distribution centers, and 2 R&D facilities around the world United States United States  ~30% share of total SE loblolly pine market  Customers include some of the largest landowners  Producing 300+ million pa (incl ~30m non-loblolly) New Zealand and Australia  ~40% share of total NZ Summerville, SC (Global HQ) addressable market  Customers include majority of the largest landowners in NZ  Producing ~20 million pa  Upside from NZ Government’s Brazil 1billion 10-year tree planting  Foothold established program  Large eucalyptus market opportunity Campinas, SP, BR  Producing ~55m pa (South America HQ) eucalyptus & pine  ~10% of market Whakatane, NZ (Australasia HQ)

12 US market advanced genetics conversion – the ‘big picture’ Seedling sales Selling Value of M per annum 450 Price of Advanced seedling genetics 400 350 MCP & VARIETAL 300 250 200 150 OP 100 time * Directional representation only as to timing and volumes

13 US Stage 1 – moving customers from commodity OP to ArborGen’s MCP products USc For ArborGen, MCP-conversion is a lower-risk deliverable strategy  Genetics are proven  Compelling value-proposition for ArborGen to up-sell existing customers to MCP  ArborGen customers want the product today  ArborGen’s existing manufacturing process is in place and proven  ArborGen has an established pricing ladder already in place for MCP (refer slide 20)  MCP production has zero technology risk  MCP products do not need regulatory approval  Competition is limited – a new entrant would take time (amongst other things!) • Would require scale manufacturing capability • Would need customer channels and customer relationships • Would require MCP product to sell! − Take 8+ years just to develop a commercial MCP orchard from ‘standing start’ − … assuming you possessed the genetics to do so

14 Improvement in ArborGen’s financials is consistent with ‘big picture’ progress Operating Cashflow (AG Consolidated Gross Margin 1 under US GAAP) (post interest, pre capex & nwc) $5 US$ millions US$ millions $25 $0 $20 $15 -$5 $10 -$10 $5 -$15 $0 2015 2016 2017 2018 2019F 2015 2016 2017 2018 2019F 1 Pre depreciation EBITDA 1 Free Cashflow US$ millions US$ millions $5 $8 $6 $0 $4 $2 -$5 $0 -$2 -$10 -$4 -$6 -$15 -$8 -$20 -$10 2015 2016 2017 2018 2019F 2015 2016 2017 2018 2019F 1 Pre transaction-related costs, impairments, and one-off non-operating costs Note: 2015, 2016, 2017, 2018, 2019F (forecast) refer to fiscal years ending 31 March.